December 1, 2018, va n noe corporation nad the rollowing debt securities that we

Question

December 1, 2018, va n noe corporation nad the rollowing debt securities that were purcn ased during 201 , ts nrst year or operation: Fair Value Unrealized Gain (Loss) $(16000) 5000 Cost Trading Securities: $84000 $68000 25000 $104000 $93000 Security 20000 $(11000 Totals Available-for-Sale Securities: $86000 $95000 101000 6600 $187000 $161000 $9000 35000 $(26000 Security Totals All market declines are considered temporary. Fair value adjustments at December 31, 2018 should be established with a corresponding charge against Income $11000 $-44000 $-26000 $11000 $26000 $11000

Explanation / Answer

Ans is Income : -26000, stock : 0

As per IFRS 9, all Available for sale securities are to be marked to market (means they are to be shown at market value) and changes in value are to be adjusted in the Income statement. Thus in case of loss: Income will be reduced together with the reduction in Value of Investment and vice versa for Gain

Whereas other securities are to be shown at acquisition cost unless changes are permanent. Since changes are temporary there will not be any impact on Trading Securitues.

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